The Effect of Business Process Representation Type on Assessment of Business and Control Risks: Diagrams versus Narratives

Abstract

ABSTRACTThe Sarbanes-Oxley Act (SOX) (U.S. House of Representatives 2002) mandates the assessment of internal controls over financial reporting, and many organizations are using diagrams to document their internal control processes. While educators regularly stress the effectiveness of diagrammatic representation of process information over textual representation, no prior study has offered convincing evidence that diagrammatic representation leads to improved performance. In an experiment, we examine students' performance on a business process risk and control assessment task using two informationally equivalent methods that are commonly taught in the classroom to document business processes: descriptive narrative (hereafter, textual) and diagrammatic. We also examine whether students' academic achievement and perceptions of their ability (self-efficacy) affect performance by type of representation. First, we find that while the method of representation has no effect on students' accuracy, those receiving the textual representation were more efficient and had a greater weighted-average performance than those receiving the diagrammatic representation. Second, we find academic achievement increases students' accuracy, decreases their efficiency, and has no effect on their weighted-average performance. Third, we find self-efficacy has no effect on students' accuracy, has no effect on their efficiency, and decreases their weighted-average performance. Finally, we find that both self-efficacy and academic achievement interact with the type of representation to affect students' performance. Implications for education and practice are discussed.